The Czech koruna edged higher against the US dollar following the Czech Central Bank decided to retain its key two week repo rate at a record low of 1.25 percent.

The Czech central bank's decision to keep interest rates flat was in line with market expectations as the inflation outlook remained low and the economy showed only weak signs of recovery.

Last month, the central bank had reduced its two-week repo rate by 25 basis points to 1.25%. The bank has cut rates by 250 basis points since starting its easing policy in August.

The koruna drifted higher to 16.975 against the US dollar by 9:00 am ET, up by more than 1 percent from its Asian session's 3-day low of 17.155. A move above the 16.8960 resistance level may push the domestic unit to touch its highest in nearly a year. The dollar-koruna pair, which closed Wednesday's deals at 17.091, is presently quoted at 16.98.

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